OnStartups

My favorite stage of a startup is the early, early days. This is when things are the most chaotic, resources are limited and the team is small enough to fit into a single car.

I've been thinking about the early days of the startups I've been involved in and put together some quick (and practical) tips on these early days.

Tips For Startups: The Early, Early Days

1. You don't need office space: Plenty of startups do just fine working out of a basement or spare bedroom.

2. Don't Bargain Shop For Small Things: Resist the temptation to find the best deal on cheap things (like computers). It may be personally satisfying to save $50 on a printer, but you're wasting valuable time.

3. Think Of A Good Name: Spend at least a few hours thinking about a name for your business. Read a couple of practical articles on the topic. Talk to other people to test your names. Most entrepreneurs spend too little time (as in almost none) on a company name. A good name won't make your startup successful, and a bad one won't make it fail, but some simple guidelines help. And, a name is hard to change later.

Note: Unsurprisingly, Guy's article is better, but I wrote mine first (did not copy his "Name Game" title).

4. No Fancy Titles: Don't waste time coming up with fancy titles for the founders. Simply use "founder" for your title and get back to real work.

5. Forget Business Plans: Instead of laboring over your business plan, labor over your business. If you do work intensely on your business plan, assume that you are the only person that will ever read it. Even your mom and your spouse won't read it. Potential investors will definitely not read it.

6. Avoid Pontificators: Early team members all need to do something. Don't recruit pontificators. Beware the pure "idea people". You want "get things done" people. There will always be more ideas in your startup than there are people to execute them.

7. Venture Funding Is Hard: Raising venture funding is actually harder than bootstrapping -- especially if it's your first startup. Try and figure out a way to get going without funding. Take the hundreds of hours you'll save and go help customers solve problems.

8. Allocate Most Time To Customer Value: Act as if someone is paying you $1,000/hour for every hour you spend making life measurably better for your customers -- and $10/hour for everything else. In the long-run, the ratio will be about right.

9. Part-Time Is Sub-Optimal (but OK): Many people will tell you that you are unlikely to succeed with a startup if you're working on it just nights and weekends. They're probably right. But, better nights and weekends than waiting forever to get things kicked off.

10. Get Started! I have yet to meet someone that took the leap, quit their job, started a company and regretted their decision (regardless of outcome). Most people that have great jobs over-estimate the risk of leaving them. Great people can almost always find another job if things go really, really poorly with their startup.

What are your thoughts? Any tips for those early, early days of a startup?

11. Wait on the tax and legal issues.Don't get distracted by incorporating, deducting business losses from your taxes or making lots of legal agreements. Produce something that is worth stealing and fighting over first.12. Start working on the product, not the infrastructure.Source code control, backups and other infrastructure is important but get some code first. Don't spend so much time setting up the ultimate development environment, only to be too tired to actually write the code.

I think that making use of your available resources should be on this list too. There are a lot of programs that are specifically geared toward helping startups and I think that list should be exploited as part of the process-- that's what they're for. Sun Microsystems has a program called 'startup essentials' that offers discounts on x64 servers, free tech support and free events to meet 'missing pieces of your personnel' and we think thats a cool move to lend a hand from the get-go. I'd be interested in seeing a huge list sometime of all of the resources out there but you can start with this one: www.sun.com/startup

Sounds right to me. That's what I learned the first time and that's what I am doing again.And you are right. The beginning is the best. I think you are the first person I have heard say so. The beginning is fun.

I've been thinking that my least favorite time is the early, early days of a startup. It's fun to start something but it's better to make progress and be able to see something in the rear-view mirror. Thanks for the tips.

I think these are almost in reverse order of importance. Get Started, Nights and Weekend OK but Full Time Better, Focus on Creating Customer Value, Bootstrap, Focus on Traction (Measurable Progress, an Evolving Sequence of Prototypes) not Specs and Conversation, Simple Plans Frequently Adjusted Based on New Facts (e.g. Customer Input), Pick a Good Name, Focus Cost Control Efforts on Major Items, Go Bedouin--at least at the Start.

Sean is right when he advises start-ups to have simple plans adjusted frequently. The idea of NOT having a plan is just ridiculous. Any VC worth their investment will require a plan. They may not read a 50 page cumbersome plan, but they will want to see the basics:1. What is the pain point? 2. What is the solution?3. What is the business model?4. Who is your market and how will you reach them?5. What is your forecast?6. Who is your competition?7. Who is your management team?8. What is your status and time line?There is NO WAY you will get funded without putting together a plan with that basic information. A plan will also help keep you focused in the right direction, and with continual little adjustments and tweaking will keep everyone on the same page.

@Dan: if you are working with partners (which in my experience greatly increases your odds of success) I would at least have a written agreement as to how you want to operate. Also I don't understand why you wouldn't want to deduct your business expenses from your taxes. Your preference for sole proprietorship probably exposes you to unnecessary liability (both tax and risk). I have to disagree on the source code control environment, I agree that some teams can make a fetish of it and lose focus but none is not the right answer to infrastructure.@Sun.com/startup enough with the ads.@Sabrina, I agree if you don't have at least a simple plan you don't know what to change when you don't get the results you were looking for. Our memory also plays tricks on us, as Russell Ackoff noted in his "decision record model" and it's better to write down a few simple reasons why the team made a decision and what outcomes they were expected. Often the dissonance between the expected outcome and the reality of the results of a decision can trigger useful improvements. You need to do this even if you aren't seeking outside funding.

Peter E

All your comments are quite good. I would like to add a couple items. (1) Focus and (2) Organizational structure aligned to execute strategy. The world is filled with may large markets, brilliant ideas, smart people and available funds, but very few start ups are successful. It is quite common that most start ups limit their success due to these two items. Start ups should grow from delivering success one at a time. Avoid to many projects and focus, focus, focus on what you do extremely well, while maintaining some element of an unfair advantage. Second to focus is the structure of the organization. Key to scalable growth is a clean organizational structure and alignment of the execution plan to the corporate strategy. This may sound like big words or an obvious topic to some, but the reality is that many startups hire to many experienced people to lead, have overlap in ownership, and the troops on the ground are not provided the clear direction. Overlaps in organizational structure and poor alignment of goals and objectives are the weakness in most failed ventures.

Ben

I think what's worked well for our clients is to just get them moving providing value to their own clients as best/fastest as possible. You can deal with books, plans, and other logistics while you're moving along doing that.In the end, you're in business to provide value to your customers. Doing that on Day 1 as best as possible can really get your business moving.

I think what's worked well for our clients is to just get them moving providing value to their own clients as best/fastest as possible. You can deal with books, plans, and other logistics while you're moving along doing that.In the end, you're in business to provide value to your customers. Doing that on Day 1 as best as possible can really get your business moving.

@Ben: certainly as a solo entrepreneur you can just get started. But if you were take a half an hour to an hour to write down your assumptions and what you believe the likely consequences of your approach you may vastly increase your rate of learning/improvement. It's still trial and error but at least you can track what you have learned. It's also helpful as things become more complex, you add more partners or employers, support more customers, or add richer offerings. It may also allow you to manage the emotional roller coaster ride that any startup puts you on: Eric Hoffer observed "our achievements speak for themselves. What we have to keep track of are our failures, discouragements, and doubts. We tend to forget the past difficulties, the many false starts, and the painful groping. We see our past achievements as the end result of a clean forward thrust, and our present difficulties as signs of decline and decay."I think you are correct to encourage people toward action over introspection and planning, but without any sort of plan how do you keep your team moving toward the same set of goals and measuring progress in the same way? Perhaps at least a journal (ok a log) might allow you to look back at the end of the week, month, or quarter and see what you've tried that's worked and hasn't.

Peter E

As a follow up on this topic, a plan is quite critical, but what is most important in the plan is the evolution. It is important to remain flexible and adjust as customers begin to pull the offering. A plan is only worth something if it is reviewed and expanded often. A start up business model must evolve similar to a product concept and target market. It is critical to evaluate from a distance and see the forest. Flexibility is critical to long term success in most start ups. We must allow the child to grow and learn from it's challenges and achievements.

Excellent post. As a startup, I struggle with balancing the planning versus the doing. I tend to lead with the doing and proving things out for customers vs. creating an extensive business plan. Since I don't intend to seek venture money, though, maybe I'm ok with this approach. I know what I'm doing and what my I need to do to get there.

Anonymous

Josh:I can tell you from experience that even if you were seeking venture money, an extensive business plan is not a requirement. The business opportunity needs to make sense, but you don't have to have worked out the details.I personally think you're on the right track to prove things via customers vs. business plans.

Pat

Disagree with 2 (bargain shop) and 5 (business plan). When we were in the startup phase, I spent very carefully, and developed a culture of the same (now 70 people). As for business plans, you need a budget right from the beginning. If you are building a product (which we did), start with a vision document (which is part of an early business plan), followed by the functional requirements (which is not, but still a critical step).

mark

We have a tech startuo with total of 4 partners, each with varying levels of contribution, so some partners will have a greater share in the company than others. We plan to seek venture/angel investors. We are currently trying to decide the best corporate structure. I have been told that an LLC is the best option, but also hear that a C-corp is the best in order to attract outside investors. I am curious to know what corporate structure other tech start-ups are using ?